The catch, however, is that "spend" is not the same as sales or
revenue. Japan, for example, is looking to rev up its generics use so that
unbranded drugs account for 60% of prescriptions in what has long been a prime
market for branded drugs. Kleinrock said this market has had a historically low
generic use, but the small youthful population cannot support the country's
growing geriatric population, making it difficult to sustain a branded drug marketplace.
Similarly, IMS said that while China is poised to overtake Japan in terms
of pharmaceutical demand, the country will also lean heavily on generics. IMS
predicted that generics will account for 64% of drugs in pharmamerging markets
by 2017.
Standbys like the US and Europe will continue to be important to the
industry, but financial pressures and patent losses are changing what the
branded pharmaceutical marketplace looks like in these geographies.
IMS said that the future will be in small-market, specialty drugs. This is
not a surprise for industry watchers who have seen rare disease become a
more regular part of the industry's research
portfolio, particularly as high-volume conditions, like diabetes, appear to be
running up against developments that benefit patients, but not to the extent
that they upend care.
Merck's EVP Adam Schechter hit on this point during his company's
third-quarter rundown, when talking about the need to fight for share in the
DPP-4 diabetes drug market, where its Januvia pill dominates, because the
branded space is just not growing. IMS attributes such a stalemate to
satisfaction with current medications, a situation which leaves “little or no
room for expensive new medicines with only minor incremental benefits.”
Specialty medications are expected to jump by around 30% by 2017. While IMS
noted that their high prices may trigger payer ire, the pipeline is somewhat
insulated, because these new, small-audience medications will have little
competition from biosimilars.
While expanded healthcare coverage could be expected to be a financial boon
for the industry, IMS said domestic and global efforts need to be embraced with
caution. Part of it is the built-in payer preference for lower-cost generics,
but IMS also noted that how universal coverage plays out has yet to be
determined. In the US, for example, we still need to find out how many will
actually enroll, and then there's the need to understand their health needs. At
the same time, the US is still recovering from from the 2007 recession.
IMS said it expects developed market spending to rebound from the $3
billion that bled out of the system during the recession, but that recovery
includes math like the following: an expected $113-billion windfall of savings
due to lapsing patents, somewhat balanced out by $40 billion in spending on the
generics.
The projected US generics scenario is that 34% of the 2012 brand spend will
move to generics by 2017, compared to Canada where it will be around 30%, and
other developed markets where it will average 22%.
IMS also noted that developed and emerging markets will be focusing on
different disease areas. The top classes in developed markets by 2017 for
developed countries, for example, will be oncology, diabetes, anti-TNFs and
pain, whereas developed markets will focus on pain, CNS drugs and antibiotics.
In terms of specialty vs. traditional types of medications, the developed
markets' priorities lean more heavily toward specialty medications compared to
developing ones which focus on traditional therapies.